State can seize bank deposits in lieu of debts, supreme court rules

Published at20:43, Jul 03 2014

The Council of State, the country’s supreme administrative court, says the state can seize bank deposits for debts owed to it – without informing account holders

The Council of State (File photo) The Greek state and insurance funds have the right to seize bank account deposits for debts owed to it without informing the account holder, the country’s supreme administrative court ruled on Monday.

In an irrevocable decision that overturns earlier rulings, the Council of State said that informing account holders of the intention to seize deposits would defeat the purpose.

“Were the (account) owner notified of the measure, he would rush to withdraw the funds from the third party (the bank)” or he or she “would transfer his assets to another party”, it said.

The court ruled that the lack of notification did not violate constitutional rules. It said debtors were well aware when payment deadlines had passed and warned that the use of “obligatory measures” against them to collect debts was possible once the deadline passed.

The ruling arose from case taken by the CEO of a now defunct company, which owed €565,393 to the Social Security Foundation (IKA), the country’s largest social insurance fund. The tax office authorised the recovery of the debt and proceeded to withdraw the funds from the account into which the CEO’s pension was paid without informing him. He only found out about the seizure nine months later when he went to withdraw funds.

In a decision in March, a section of the Council of State had ruled the seizures were illegal if the state did not inform the account owner.